The Nasdaq Stock Market, Inc. today announced that the U.S.Securities and Exchange Commission has exempted securities listed on the Nasdaq Capital Market from state “blue sky” registration requirements.

The exchange says that this action, which will be effective on May 24, is an important milestone in the evolution of the Capital Market and will reduce the cost of raising capital for Capital Market companies and their investors. The SEC adopted this exemption in response to a petition filed by Nasdaq.

The Capital Market was formerly known as the Nasdaq SmallCap Market. Nasdaq consists of two distinct market tiers: the Nasdaq National Market and the Nasdaq Capital Market. All companies listed on The Nasdaq Capital Market must meet certain financial requirements and adhere to Nasdaq’s corporate governance standards.

“This watershed development is a reflection of the quality of Nasdaq’s regulatory program and the degree of investor protection afforded by Nasdaq’s listing requirements,” said Michael Emen, senior vice president, Nasdaq Listing Qualifications, in a news release. “We believe this exemption will play an important role in facilitating the capital-raising process for smaller public companies, which is consistent with Nasdaq’s commitment to efficiency in capital formation. We are grateful for the support Nasdaq received throughout this process.”